1. ___D____ For 1996, cost of goods available for sale for Jetson Corporation was $1,000,000.

The gross margin was 25% on Sales. Sales for the year were $800,000. What was the amount of ending inventory? a. b. c. d. $0 $200,000 $350,000 $400,000

2. ___C____ On April 15, 1996, a fire destroyed the entire uninsured inventory of Toms Retail Store. The following data are available: Sales, January 1 through April 15 Inventory, January 1 Purchases, January 1 through April 15 Markup on cost The amount of the inventory loss is estimated to be: a. b. c. d. $50,000 $45,000 $42,000 $40,000 $360,000 50,000 280,000 25%

Linkos Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 40% on selling price is considered normal for each product. Specific data with respect to each product follows: Product #1 Product #2 Historical cost $30.00 $50.00 Replacement cost 35.00 45.00 Estimated selling price 55.00 80.00 3. ___B____ In pricing its ending inventory using the lower of cost or market, what unit values should Linkos use for Product #1? a. b. c. d. $28 $30 $33 $35 Quiz 7 continued over . . . Quiz 7 continued.

4. __C_____ In pricing its ending inventory using the lower of cost or market, what unit values should Linkos use for Product #2? a. b. c. d. $45 $46 $48 $50

5. __A_____ Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating to the computation of the inventory at July 31, 2010, are as follows: Cost Retail Inventory, 2/1/10 $ 200,000 $ 250,000 Purchases 1,000,000 1,575,000 Markups, net 175,000 Sales 1,750,000 Estimated normal shoplifting losses 20,000 Markdowns, net 110,000 Under the lower-of-cost-or-market method, Henke's estimated inventory at July 31, 2010 is a. $72,000. b. $84,000. c. $96,000. d. $120,000. 6. __D_____ At December 31, 2010, the following information was available from Kohl Co.'s accounting records: Cost Retail Inventory, 1/1/10 $147,000 $ 203,000 Purchases 833,000 1,155,000 Additional markups 42,000 Available for sale $980,000 $1,400,000 Sales for the year totaled $1,050,000. Markdowns amounted to $10,000. Under the lower-of-cost-or-market method, Kohl's inventory at December 31, 2010 was a. $294,000. b. $245,000. c. $252,000. d. $238,000.

Quiz 7 continued over . . . Quiz 7 continued.

7. __B_____ Boxer Inc. reported inventory at the beginning of the current year of $360,000 and at the end of the current year of $411,000. If net sales for the current year are $2,214,600 and the corresponding cost of sales totaled $1,879,400, what is the inventory turnover ratio for the current year? a. 5.74. b. 4.88. c. 5.39. d. 4.57.

8. ___C____ East Corporations computation of cost of goods sold is: Beginning inventory Add: Cost of goods purchased Cost of goods available for sale Ending inventory Cost of goods sold The average days to sell inventory for East are a. 56.9 days. b. 63.1 days. c. 66.4 days. d. 75.8 days. 9. ___A____ Lower-of-cost-or-market a. is most conservative if applied to individual items of inventory. b. is most conservative if applied to major categories of inventory. c. is most conservative if applied to the total inventory. d. must be applied to major categories for taxes. 10. __D_____ What is the rationale behind the ceiling when applying the lower-of-costor-market method to inventory? a. Prevents understatement of the inventory value. b. Allows for a normal profit to be earned. c. Allows for items to be valued at replacement cost. d. Prevents overstatement of the value of obsolete or damaged inventories. $ 60,000 405,000 465,000 80,000 $385,000